The One Potentially Fatal Flaw with Basic Economy Airfares — Exacerbated

U nited Airlines released details of its new Basic Economy airfares which it intends on offering to its customers as its business model continues to emulate that of Delta Air Lines, whose basic economy airfares have been around for a few years — but the restrictions of this new airfare exacerbates the one potentially fatal flaw with Basic Economy airfares, as explained later in this article.

The Marketing Spiel

“Customers have told us that they want more choice and Basic Economy delivers just that,” Julia Haywood — who is the executive vice president and chief commercial officer at United Airlines — was quoted in this press release. “By offering low fares while also offering the experience of traveling on our outstanding network, with a variety of onboard amenities and great customer service, we are giving our customers an additional travel option from what United offers today.”

There must be some rather clean swine running around because I call that hogwash. Why not also offer lavatory suite class airfares? The customer gets the experience of traveling while seated on a toilet and can lock the door of the lavatory for complete privacy. “Imagine answering the call of nature without ever having to get up.” How about seats bolted to the wings, where customers can experience the only “natural air conditioning” on — yes, George Carlin, on in this case — the airplane while enjoying 360 degree views of the outside?

Just because “offering low fares while also offering the experience of traveling on our outstanding network, with a variety of onboard amenities and great customer service” does not mean that that is an “additional travel option” — unless you are willing to put up with the restrictions which erase the euphemisms from what is little more than marketing gobbledygook.

The Reality: Restrictions

The restrictions of the basic economy airfare are listed below — along with my comments.

  • Automated seat assignments will be given at check-in, and passengers acknowledge at the point of a multi-seat purchase that seating together is not guaranteed. No guarantees are available even with seat assignments. From the point of view of the airline, this allows those customers who pay more to have first dibs on the selection of seats — although this policy is potentially unfair to customers with elite level status who purchase Basic Economy airfares. However — as much as I would not want a middle seat behind an engine in the back of the aircraft — I cannot argue with this policy.
  • Carry-on bags are limited to one personal item, unless the customer is a MileagePlus® Premier® member, primary cardmember of a qualifying MileagePlus credit card, or Star AllianceTM Gold member. This is potentially harsh to those customers not included in the exceptions, as it goes against the “variety of onboard amenities” included in the United Airlines “experience” and is the key restriction which exacerbates the one potentially fatal flaw with Basic Economy airfares — which is explained later in this article.
  • There will be no voluntary ticket changes except as stated in the United 24-hour flexible booking policy. Initially, I could not argue with this policy, as I believe that this is fair if the changes are for similar tickets — but if a customer wants to pay for a more expensive ticket, that customer should be allowed to do so. Why not add a little extra to the cost of changing a ticket so that United Airlines can profit from it? For example, if upgrading to a premium economy seat typically costs $75.00 for other passengers, why not charge $100.00 0r $125.00 for a passenger with a Basic Economy ticket to do the same? This way, the passenger still has choices; while United Airlines potentially increases its revenue.
  • MileagePlus program members will earn redeemable award miles; however they will not earn Premier qualifying credit (miles, segments, or dollars), no lifetime miles, and no contribution to four segment minimum. Does management at United Airlines really believe that many customers will take advantage of restrictive Basic Economy airfares to earn elite level status? This policy discourages loyalty. At the very least, offer partial credit towards such perks as elite level status and lifetime miles to customers who purchase Basic Economy airfares — this way, “gaming” the system is more difficult but still has the potential to foster loyalty to the airline.
  • Customers will not be eligible for Economy Plus or premium cabin upgrades. This is understandable from the point of view of the airline, as offering a cheaper way to get a seat in the premium class cabin is not in the best interest of the airline — but it still potentially frustrates the customer who has earned elite level status, as with the MileagePlus program now based on revenue instead of distance flown, upgrades would be far more difficult to experience with Basic Economy airfares anyway.
  • Customers will board in the last boarding group (currently Group 5) unless a MileagePlus Premier member, primary cardmember of a qualifying MileagePlus credit card, or Star Alliance Gold member. I cannot argue with this policy, as I believe that this is fair.
  • No combinability with regular economy fares or partner carriers. Interline travel is not permitted. Is this because keeping track would be too difficult? As long as the passenger pays the appropriate prices for the different airfares, what purpose does this restriction serve? If anything, it could dissuade a customer from patronizing United Airlines and travel on another airline.

The One Potentially Fatal Flaw with Basic Economy Airfares

Although I could not argue with some of the aforementioned restrictions, we still do not know at this time what will be the cost of flying as a passenger with a Basic Economy ticket. Like the lemming that is United Airlines, it will probably follow similar pricing to what Delta Air Lines charges for its Basic Economy airfares: significantly more than what ultra-low-cost carriers charge for their base fares; but insignificantly less expensive than its regular economy airfare…

…and if that is the case, this article which I wrote and posted on Wednesday, March 9, 2016 gives specific examples of why that pricing structure is not ideal.

Although that time has arguably not yet arrived, the one potentially fatal flaw with basic economy airfares is that the strong loyalty component with legacy airlines has either significantly eroded or disappeared altogether with many passengers; and combined with the loss of amenities and benefits in product and service amongst the legacy carriers, eschewing ultra-low-cost carriers is not such a clear decision anymore for passengers seeking to save money.

In the past, loyalty would have easily trumped low cost if the passenger had a choice of airlines. More comfortable seats, elite level status benefits, selection of seats, luggage allowances and free snacks and beverages are some of the products and services which at one point would have had many passengers not even think twice pertaining to choosing a legacy carrier over an ultra-low-cost carrier…

…but ever since amenities and benefits have significantly eroded, the choice is not so clear cut anymore. For the first time recently, I actually considered purchasing airfares on both Spirit Airlines and Frontier Airlines, thinking to myself that if I am going to be on a domestic flight for two hours or less, why would I pay more to be on a legacy airline?

The airlines may still have international routes and more frequent schedules to allow for more flexibility on their side — but if you have not earned elite level status on an airline, you will not enjoy such benefits as changing to an earlier flight or accessing a lounge at an airport anyway.

In other words: the legacy carriers seem to be making the choice between them and flying as a passenger aboard an airplane operated by an ultra-low-cost carrier that much easier. Why else would such ultra-low-cost airlines as Spirit Airlines and Frontier Airlines not only be significantly growing; but also be profitable?

Frontier Airlines was the fifth-most profitable airline in the United States as of September of 2015, according to this article written by Laura Keeney for The Denver Post; and despite its problems and issues, Spirit Airlines has been one of the most profitable airlines in the United States in recent years.

Summary

Do the names Ted, song and CalLite mean anything to you? Those were the names of the low-cost carrier subsidiaries of United Airlines, Delta Air Lines and Continental Airlines respectively. They all ultimately failed.

If a customer is truly price sensitive, he or she is not going to pay more for the United Airlines “experience” in basic economy that he or she would pay to be a passenger on airplanes operated by Spirit Airlines or Frontier Airlines — even after paying extra in ancillary fees for a couple of extra amenities…

…but if he or she actually wants to experience what United Airlines has to offer, he or she will pay the extra few dollars over the Basic Economy airfare to do so.

The commercial aviation landscape has changed considerably since the introduction of those brands; but for the aforementioned reasons listed in this article, I believe that the basic economy concept — in its present form, anyway — will eventually go the way of those long-defunct brands.

If you purchase a Basic Economy airfare, be prepared to use the line for Group 5 to board the aircraft. Photograph ©2016 by Brian Cohen.

3 thoughts on “The One Potentially Fatal Flaw with Basic Economy Airfares — Exacerbated”

  1. Tony says:

    You speak of loyalty from your perspective. And yet American’s market research has shown that 85% of its passengers only fly once a year. Airlines are not going to cater any amenities to the lowest bidder, and why should they? If having the “best” airline ensures loyalty which ensures the best profits, then Jetblue and Virgin America would be the market leaders, and they are most certainly not, while airlines like Spirit and Allegiant are making record profits.

    1. Brian Cohen says:

      You and I seem to actually agree, Tony.

      Of course Spirit Airlines and Allegiant Air are reporting record profits — I have reported that in multiple articles in the past — precisely for the reasons you mentioned.

      Why, then, would the purely cost-conscious customer want to pay more for a Basic Economy flight on United Airlines or Delta Air Lines — unless they also have some semblance of loyalty or unless those airlines fly on routes which no ultra-low-cost carrier serves?

  2. Shaun says:

    I think they are trying to make sure basic economy fares don’t canibalize their current bread and butter business customer. They hope they can give mom and pop kettle their $79 rt to florida….then get them to pay $100+ in seat, luggage, bathroom fees.

    But they do not want to give the guy who will pay $400 for an ord-lax flight the same cheap fare with no chance to upcharge him since he’s elite.

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